CoinGecko Crypto Industry Report 2022

Today Coingecko released its 2022 Annual Crypto Industry Report. 

Coingecko is one of the most popular data aggregators from the crypto markets, and every year it publishes a summary report of what happened. 

Coingecko’s 2022 crypto report

The 2022 report consists of 49 pages of data and charts showing what most important things happened during the year in the crypto markets. 

2022 was a tumultuous year, marked by a long crypto winter that is still ongoing. For example, the total cryptocurrency market capitalization as of 1 January 2023 was $829 billion, or 64% less than a year earlier. 

However, despite numerous problems, including the collapse of DeFi token prices and NFT demand, developers have continued to create new and innovative protocols, resulting in new trends and narratives.

The report identifies 8 main highlights. 

The first is the fact that the bulk of the collapse occurred during the first half of the year, while in the second half of the year, once the total market cap fell below $1 trillion, it never fell below $800 billion, eventually recovering to $1 trillion in early 2023. 

The second is that stablecoins also lost market capitalization: $27.3 billion less, overall, despite their increased dominance, but mostly due to USDT, as USDC and BUSD saw their market capitalization increase.

The third is the failure of FTX, which impacted over 1 million users. 

The fourth is that other assets in other markets also performed disappointingly, with the exception of oil and the US dollar. 

The fifth, on the other hand, is a positive fact, namely the steady increase in ETH staking, which reached 15.8 at the end of the year, thanks to Ethereum upgrades.

The sixth is the 73% collapse in the market capitalization of DeFi tokens, excluding stablecoins and wrapped tokens.

The seventh and penultimate is the drop to 65.4% of OpenSea’s market share among the top 5 NFT marketplaces. 

The last is the decline in spot exchanges by 67.3%. 

The second semester of the crypto market according to CoinGecko’s report

Interestingly, the bulk of the collapse occurred from the beginning of the year up to and including June, while during the second half of the year there was a period of downward lateralization leading to the recovery in early 2023 of the trillion capitalization. This does indeed appear to be the key threshold below which the market reacted to rally back above. 

Moreover, the FTX fiasco was the last act in the rush to exchange withdrawals, which subsequently seems to have stopped, or at least returned to normal. 

This justifies the steady downward trend over the course of the year in trading volumes, with a daily average of $86.0 billion in 2022.

Throughout most of the course of the year, the movements of the crypto markets were closely correlated with those of the US stock market, but in the fourth quarter the correlation was blown with the further collapse in November just as stocks were showing signs of recovery.

Moreover, among the major assets examined, the best performing was actually the US dollar index (DXY), although most of its 2022 growth was lost in the fourth quarter. What makes the difference in this case is the Fed’s monetary policy. 

The report states that although the year-end situation seems to have calmed down, the crypto winter is actually still on, so much so that more crypto companies and institutions are likely to fall during 2023. 

Ethereum and DeFi

Despite the collapse of the crypto markets, Total Staked Ether (ETH) showed steady growth with +25 % in the first quarter, +17.8% in the second, +8.2% and +12.5% in the fourth, rising from 8.8 million at the beginning of the year to 15.8 million at the end of the year. 

According to Coingecko, the increase in the first two quarters was due to bullish sentiment in anticipation of the Merge, while what happened after the mid-September Merge could be due to the upcoming Shanghai upgrade scheduled for March 2023. 

ETH staking continues to be dominated by Lido with 29.4 % of all ETH in stakes deposited on its 29 nodes. In second place is Coinbase with 12.8% (less than half). 

The market capitalization of DeFi tokens has shrunk by 72.9%, with a total loss of more than $48.4 billion. According to CoinGecko, DeFi protocols were most impacted by inflated valuations during the 2021 bubble, and large capital withdrawals. Protocols such as Convex Finance (CVX ) and Alchemix (ALCX) suffered price declines of up to 95.0%.

NFTs and volumes

NFT trading volumes plummeted 93.1%, with NFT creators’ royalties falling by 95%. 

OpenSea continues to dominate this market, but with a smaller market share. In particular, the increase in NFTs on Solana pushed Magic Eden to 12.5% of the overall share of this market. 

Cryptocurrency spot trading volume also plummeted, with a 67.3% decrease. The biggest drop occurred in the last quarter, with a 21.2% reduction from the previous quarter. 

According to Coingecko, this sharp drop in volume, which is still ongoing, would be a sign that investors are withdrawing from this market.

The picture therefore is bleak, although some tentative signs of a possible recovery are beginning to appear.